Bitcoin and the Regression Theorem

Jeffrey Tucker and friends discuss how a money evolves in history and in the digital era, in light of Mises’s demonstration that a real money emerges from use value. This hangout will further explore issues from Tucker’s piece appearing on FEE.org. http://www.fee.org/the_freeman/detail/what-gave-bitcoin-its-value
Bitcoin and the Regression Theorem

5 Responses

Liberty.meAugust 28, 2014 / 6:06 pm

Patrick DukemajianAugust 28, 2014 / 7:07 pm

Very astute of Jeffrey to tie the regression theorem to the blockchain and
not the unit. There may be no payment required for participating in an
open source project but that doesn’t make it free. You still need some
technical acumen and time investment. You also need to use computer memory
and computing power so that fits nicely with the theorem even if there is
no “market price”. ﻿

Jason ParthumAugust 29, 2014 / 4:49 am

My perspective of how the Regression Theorem (which is proven as opposed to
*theory* , BTW) applies to Bitcoin is similar, but *slightly* different.
The ‘bits’ that Bitcoins are comprised of fully qualify as having prior use
value, and that value was (and still is) quantified monetarily in prices
paid for computer systems, software, communications services, etc. I don’t
see the blockchain itself as the final point of regression, but rather the
bits preceding even the blockchain. I see the blockchain as wholly
irrelevant to the *monetary* value of Bitcoin, and entirely relevant to
it’s *currency* value; which is separate and distinct.
To refer back to Jeffery’s example of salt as money: If salt were to be
pressed into coins, those coins would have additional (currency) value
beyond that of the same quantity of salt in non-coin (commodity) form. The
service provided merely by the item being in currency form (more portable,
more scarce, more easily authenticated, etc.), in-and-of itself is enough
to compel people to prefer non-coined salt for seasoning and preserving
their food so that the currency *form* of the coined salt would be
preserved. Hence, the currency has it’s own unique value, above and beyond
that of the commodity from which it was derived. The blockchain serves as
the ‘minting’ process to produce currency from bits, in the same manner
that a ‘pressing’ process would be used to produce currency from salt,
providing (additional) currency value that is wholly separate and distinct
from the underlying commodity value. This is precisely (in regression) the
“point where it ceases to be the value of money and becomes merely the
value of a commodity”.

The RT seems to completely validate Bitcoin, with no questions left
unresolved, when we regress the emergence of it’s value further back;
*prior* to the blockchain. Thoughts/Criticisms?﻿

Mirco RomanatoAugust 29, 2014 / 10:43 am

The big problem with the Regression Theorem (RT) is people have the
tendency to add some assumptions to it, often unconsciously.
I’m pretty sure Mises didn’t have implicit assumptions when he developed
the RT. You do not develop an aprioristic theorem with unstated prior
assumptions.

This is because Mises were so much stern on people not using proper wording
when explaining concepts. Fuzzy words bring fuzzy reasoning and mislead.﻿

rizoryanSeptember 2, 2014 / 5:28 pm

Thanks for the insight… You mentioned that people aren’t embracing BTC
because they can’t grasp the technology but I don’t think most even grasp
USD. Most think the Fed Reserve is ran by the gov… I think BTC will find
its place when it’s easy enough to use and obtain without understanding the
technology ﻿